Borrowers, Investors, and Usury Laws

Peter Temin and Hans-Joachim Voth

in Prometheus Shackled

Published in print January 2013 | ISBN: 9780199944279
Published online January 2013 | e-ISBN: 9780199980789 | DOI:
Borrowers, Investors, and Usury Laws

Show Summary Details


The English law set a maximum interest rate on loans. To trace the regulation's effect, this chapter examines the tightening of the usury laws in 1714, when the maximum permissible rate was reduced from 6 to 5 percent. The micro data, derived from the bank archives of several goldsmith banks, suggest that only the most well-connected and rich clients retained access to borrowing; the importance of collateral increased. As a result, the efficiency of the English financial system declined. At the same time, the government had an unfair advantage in competing for savings, as reflected in low borrowing rates.

Keywords: usury laws; loan pricing; collateral; borrowing; lending; risk; social structure; re-feudalization of lending

Chapter.  8577 words.  Illustrated.

Subjects: Economic History

Full text: subscription required

How to subscribe Recommend to my Librarian

Buy this work at Oxford University Press »

Users without a subscription are not able to see the full content. Please, subscribe or login to access all content.